In recent years, blending various protein wastes has resulted in the development of new hybrid composites, which display innovative functionalities with superior physico-chemical properties. One of the options explored in this work is the suitable modification of collagen hydrolysate (waste from the leather industry) along with degraded black liquor from the paper and pulp industry. In detail, the preparation of hybrid composites from collagen hydrolysates and degraded black liquor of different pH (14 and 7) was performed through a simple process. The characteristic features of the composites were thoroughly investigated by Fourier transform infrared spectroscopy (FTIR), dynamic light scattering (DLS) using a Malvern Zetasizer and scanning electron microscopy (SEM). The multifunctionality of the hybrid composites provided the opportunity to utilize this type of composite as a retanning agent in leather processing. The composites also exhibited enhanced functional properties as well as improved dyeing, thus making them a better retanning agent. The composite treated leather shows good softness, improved belly filling, and high strength with uniform dyeing. Hence, the potential use of multifunctional hybrid composites has gained more importance in economic processing.